Dan D Kim

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2020 June July Investment Report

2020-08-10 Dan D. Kimmoney

It’s about time for another update.

I’m saddened to say that I can no longer execute swing trading as I have done in April and May. I have recently started a new job that prohibits me from selling any securities for a profit within 30 days of buying them. Thus, swing-trading Dan is bye-bye. I’m going to have to make sound, longer-term decisions.

Therefore, I will no longer provide detailed day-to-day summaries of trades I made.

June

Before my new job started, I had a bunch of “should I buy?” in June.

One of them was Blackberry.

Blackberry

Blackberry logo

Their earnings date was coming up (June 23 2020), and I was interesting in timing it.

The company has already proved itself to be smart and agile, able to navigate through turbulent times to come out on the other side. Now I want to find out if I should buy.

After a bunch of research, I decided not to get it, for the following reasons.

  • Blackberry is in a competitive market, and they are not a distinguished leader in the field
  • Their products are not well-suited for COVID, in my opinion. Two huge chunks of revenue coming in from IoT and automobiles, which can both be negatively affected by COVID. Cars, there’s just less demand for cars. Car rentals declaring bankruptcy and all. IoT, It seems pretty stable, but my problem is that there’s no indication of growth.
  • Balance sheet isn’t good. Their revenue is going up, but so are their costs. Their profits are not consistent. Given their uncertain position in the market, I’m just not convinced to bet on Blackberry’s future right now.

Brookfield Property Partners

Brookfield Property Partners logo

I heard about BPP through a friend. Looked into it. Strong company, but their dividends are quarterly, so no.

Carnival Corporation

Carnival logo

I was pretty interested in this volatile travel stock, as their earnings date was coming up.

I took a weekend to take a look at it. I don’t have my workbook with me at the time of writing this, so I don’t have exact numbers. But long story short, I decided not to get it because of the following reasons.

  • Carnival owns 109 ships, and they burn about $1 billion cash / month. Extremely dangerous situation. If I want to get into CCL, I would need to time it perfectly. And I suck at that.
  • No certain good news for sailing in sight
  • Way too little cash on the side. They already had to introduce more stocks and convertible bonds. Yikes. Ok bye.

June was going by without much action. I didn’t think there was anything particularly interesting in my sight, until…

Social Commerce

I came across this Bloomberg Businessweek article. It basically talks about the online influencer’s e-commerce market, with China as the prime example. It starts off talking about someone named Huang Wei, who sells millions of $$ worth of goods on her livestreams, every single night. Costmetics, appliances, prepared foods, clothing, and even houses and cars.

Viya Chinese online influencer livestream show

Their e-commerce has developed to a new level. People come to watch livestreams for entertainment. Influencers will squeeze in an infomercial here and there into their curated content. A button appears on the video for users to buy the item, all without leaving the platform and missing a single second of the livestream.

I don’t want to bore you with the details. You can simply read the article for youself. But the question I had from this was: What about the Americas? Are we different? Or is that where we are also going?

I’m convinced that we are going towards the same route. Here’s why.

3 Kingdoms Dynasty of E-Commerce

Right now in the West, there are 3 parts to online e-commerce. They are:

  1. Gathering of information (comparing products)
  2. Watching reviews online
  3. Purchasing products on the most beneficial platform

The 3 Factors of Social Commerce

Say you want to buy a new phone. What do you do?

  1. You might Google around for research.
  2. Then watch reviews of the product on Youtube.
  3. Once you are confident with the decision, you may proceed to buy it on Amazon, or wherever is the most convenient for you.

That’s how we shop online in the Western society, right now.

But I think the future online shopping experience is going to be streamlined. Western companies are going to fight for that one have-it-all platform where you can research, compare, watch reviews, and buy, all in the same single platform.

And it’s already happening.

Facebook and Shopify Partnership

Note: when I say Facebook, I’m talking about the company that owns Facebook, Instagram, and WhatsApp. Not just the Facebook platform.

Facebook and Shopify Partner for Facebook and Instagram Shop

Back in May 19 2020, Shopify and Facebook announced a partnership. This excited the average investor. Shopify investors were excited at the potential reveneue growth, as well as the security of being Facebook’s partner in e-commerce. Facebook investors were excited about having Facebook users not leave the platform for buying an item. Right now on Instagram, clicking on a product will open a browser session within the app, leading you to a website set up by the seller. With Instagram Shop, that would no longer be the case.

When I first saw this partnership, I didn’t think too much about it. But in June, I realized that Facebook has a much larger ambition. They are moving the puzzle pieces into the right place for a successful transition into social commerce. More on that later, but for now, let’s look at a competitor.

Amazon Live

Have you ever heard of Amazon Live? It launched in 2019.

Amazon Live screenshot

Nobody I know has ever heard of this. I didn’t know about it myself, until I had my software engineering interviews with Amazon.

It’s not a stretch to say that it hasn’t really taken off…

What’s the problem here?

The problem is the users. Amazon just doesn’t have that social network component to their products.

People shop on Amazon. People run businesses on Amazon.

But nobody goes on Amazon to watch videos of influencers. Nobody goes on Amazon to explore videos of products. People go to Youtube for that. People follow influencers on Instagram. Not Amazon Live.

What You Need to Succeed in Social Commerce

To be the leader in social commerce, you gotta get these 3 things:

  1. User community
  2. E-commerce integration
  3. Product comparison feature

User Community

Which came first, the user or the influencer? The two feed off on one another. You can’t just buy off all the influencers and expect people to follow. You need a user base. You need a platform where people will be rewarded for just “hanging out” on it, without the intention of spending money. Like Youtube, TikTok, Reddit, and Instagram. Get the users. Get the eyeballs scrolling on your app.

E-commerce Integration

The owner of the check-out process will be facing a goddam hurricane of fat paycheques. Having users perform the checkout without leaving your platform? That means the platform can basically determine the payment fees, commisions, etc. Huge money deal right here. I mean, look at Amazon.

Product Comparison Feature

I think this is the least important out of the three, but this can definitely add to the “competitive edge” of the platform. Making it easy for users to understand the different products will help them make a confident choice. Doing this without leaving the platform will only make the platform more successful.

Google Announces Shoploop

On July 16, 2020, Mother Google joined the game with the announcement of Shoploop.

Google announces Shoploop

Here is the inspiration for the app, from their blog post:

It turns out [someone]‘d seen somebody promote a makeup product on social media, and wanted to check it out—so she watched reviews on YouTube to see how it would look in real life and whether other people liked it. Then she looked it up on an e-commerce site to buy it. This took three different apps or websites, at minimum, to find what she was looking for.

This was the original insight for a new experiment Area 120 is launching today: Shoploop, a video shopping platform for discovering, evaluating and buying products, all in one place.

3 different websites to buy one product. That’s the problem with e-commerce right now, and it’s the next big gold rush. Google, Facebook, and Amazon are already racing for the crown.

So, which one do you think will win?

Amazon Considerations

I don’t see how Amazon will come out on the other side of this. They simply don’t have users. Their platform doesn’t attract normal people from coming on the platform and checking it out. At best, some interested shoppers might check it out to see reviews before buying, but they can also do that on Youtube. What’s the point? What’s the benefit of using Amazon Live?

I think Amazon’s pivot point will be a social network. Maybe if they buy TikTok…

Google Considerations

While Shoploop is definitely a good goal, I am not convinced it’s going in the right direction.

From their announcement, Shoploop will have 90-second videos. What? Why 90 seconds? This is something I don’t get. Are they trying to tailor this to the younger generation? Shorter videos are usually more tailored towards those with shorter attention spans, which points towards the younger shoppers. Maybe I’m missing something, but Shoploop does not sound like the grand all-in-one platform that I had in my mind.

I really like my 10-20 minute videos that go into thorough the details on products that I want to buy, especially if the price tag makes my wallet cry.

But why is Google such a strong contender? Because they own Youtube. Right now, where do you go to watch reviews of products? Who do you follow for tech gadgets? Where do you go to see a product in action? Youtube.

Maybe Google can find out a way to put two and two together.

Facebook Considerations

I think Facebook is in the best position to take on social commerce.

I mean, they already have billions of users on their platforms. I think a lot of people underestimate this. It’s really fricken hard to grow a social website that huge. It’s not a question of throwing money at the problem. You need to play your cards well and solve the puzzles. Facebook did that really well.

The Facebook platform itself might be dying out, but Instagram is still going strong, and there is already a ton of e-commerce happening through Instagram. Instagram Shops are definitely a step in the right direction. Have Instagram users buy items without going to another website. Keep them there. And later, help users make a confident decision by having them compare products without leaving the platform.

Facebook already has a strong community on their platforms. The influencers are already there. The users are already there. The e-commerce platform is now there.

Their weakness? Product research. If they make it easy for users to compare products without leaving their platform, they are gonna be vibing in Payday Katarina.


That’s all. Juicy revenue-generating projects. Which company do you think is in the best position? Let me know at dougouk@gmail.com

Happy investing!